Harvard UniversityMANAGEMENT 105Advanced Financial Accounting Test

Document Content and Description Below

Use the following information for question 1 CPA Corporation purchased a 10% interest in Sticky Company on January 1, 2010 as an available-for-sale investment for a price of P120,000. On January 1,... 2015, CPA Corporation purchases 7,000 additional shares of Sticky Company from existing stockholders for P945,000. This purchase increased CPA interest to 70%. Sticky Company had the following statement financial position just prior to CPA second purchases: ___________________________________________________________________________ Assets Liabilities and Equity ___________________________________________________________________________ Current assets 495,000 Liabilities 195,000 Building (net) 420,000 Common stock, P30 par 300,000 Equipment (net) 300,000 Retained earnings 720,000 _______ ________ Total assets 1,215,000 Total liabilities and equity 1,215,000 On the date of the second purchase, CPA determines that the equipment of Sticky was understated by P150,000 and had a 5-year remaining life. All other book values approximate fair values. Any remaining excess is attributed to goodwill. 1. On January 1, 2015 consolidated statement of financial positon, what is the amount of goodwill to be reported? A. P180,000 B. P45,000 C. P75,000 D. P120,000 Use of the following information for questions 2 and 3 Penny Company owns an 80% controlling interest in the Money Company. Money regularly sells merchandise to Penny, which then sold to outside parties. The gross point on all such sales is 40%. On January 1, 2014, Penny sold land and a building to Money. The value of the parcel is 20% to land, and 80% to structures. The pertinent data are the following [Show More]

Last updated: 1 year ago

Preview 1 out of 8 pages